Profitable ETF Trading Strategies: appreciating the power of rehearsals
Rehearals are considered to be one of the highest payoff practices in the military planning process. It’s where units develop and reinforce the patterns of action and decision-making that make all the difference in combat. Rehearsals will improve your trading practice as well, if you understand how to do them well.
There are 4 main reasons why rehearsals can improve your trading practice:
1. Practice essential tasks. By identifying the critical tasks in your systems, you can focus on the ones that contribute the most to success or failure
2. Identify weaknesses or problems in the plan. You often will not discover gaps in your logic or problems with the concept until you have “driven the route ” from start to finish from the perspective of the operator. This is especially true if you have built your plan out of component pieces, each which are individually sound, but have not yet been linked together before.
3. Coordinate subordinate element actions. When you use a building block approach to trading system development, sometimes you will discover that the sum of the parts is different than the whole. This means that there are unknown or unintended consequences of piecing things together which are not revealed until you put the plan into operation, or better yet, have a decent rehearsal to test the seams.
4. Improve understanding of the concept of operations. Once you have driven the entire plan, you will develop a sense of completeness and appreciation for its qualities or problems areas from the top down. You will be able to see the seams, where pieces come together in utual support or in sequence.
By paying close attention to your rehearsals, and making them as realistic as possible, you will be able to dramatically improve your trading practice.
Taken together with effective After Action Reviews, rehersals are an important part of your preparation phase. Time spent here will add directly to your bottom line.